Derivatives strategy on Muthoot Finance by Nandish Shah of HDFC Securities

The stock price has already given breakout on the daily chart by closing above the resistance level of Rs 737 on last Monday with higher volumes

Bull Spread strategy on MUTHOOT FINANCE

Buy Muthoot Finance January 750 Call at Rs 25 & simultaneously sell 800 call at Rs 9

Lot Size: 1,500.
 

Cost of the strategy: Rs 16 (Rs 24,000 per strategy)

Maximum profit: Rs 51,000 If Muthoot Finance closes at or above Rs 800 on January expiry.

Breakeven Point: Rs 766

        

Rationale:

-- We have seen Long rollover in the Muthoot Finance to the January series with price going up by 0.87 per cent.

-- Stock price has already given breakout on the daily chart by closing above the resistance level of Rs 737 on last Monday with higher volumes.

-- Oscillators and Momentum Indicators like RSI and MACD showing strength in the stock on the daily and weekly charts.